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Following on from previous posts, another short update on the iPredict stocks for National and Labour to win the 2014 election.

Daily average trade prices for National broke through the 80c barrier on 26 June, and Labour went below 20c on the same day.  The prices were reasonably stable around those levels for about six weeks until 13 August 2014 when the Dirty Politics scandal broke and National took a steep hit.  Average daily prices for National were below 70c for several days, and bottomed out at about 64c on 22 August, well before Collins’ resignation on 30 August.  The stocks have since rebounded, with National today trading for around 84c, an all-time high.

While there was obvious movement, most likely attributable to fear over the fallout from the Dirty Politics scandal, it was short lived.  As mentioned in the previous post the clock is running out for Labour, which needs to find some sort of game-changer, and there is less and less time left before the election for them to do so.

Graph of prices below:

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Since Dirty Politics was released trading volumes and volatility are up significantly. During the last month there have been over 7,100 trades (National and Labour combined), and total volume was over 115,000.  Since opening on 26 October 2011 the total volumes traded are about 195,000 for National and 173,000 for Labour, so almost 1/3 of total volume traded in the last 3 years has been in the last month.  The stocks definitely aren’t moving about on small volumes.

Weekly volume, 2014 National election victory stock on iPredict.

Weekly volume, 2014 National election victory stock on iPredict.

Weekly volatility, 2014 National election victory stock on iPredict.

Weekly volatility, 2014 National election victory stock on iPredict.

The consensus seems to be that this isn’t going to be a particularly close election.

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Following on from previous posts, another short update on the iPredict stocks for National winning the 2014 election.

Daily average trade prices for National have trended up towards 80c, and Labour down toward 20c.  Prices are as follows:

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

You can see that the prices for National stabalised just above 70c in April and May after earlier peaking at around 76c in mid-March.  I don’t believe that any single event has caused the prices to move.  It’s more a case of running out the clock; Labour needs some sort of game-changer, and there is less and less time left before the election for them to find one.

Weekly trade volumes are up, and now amount to about 1600 shares per week, or $1100 per week.

Daily volume, 2014 National election victory stock on iPredict.

Weekly volume, 2014 National election victory stock on iPredict.

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Following on from previous posts, another update on the iPredict stocks for National winning the 2014 election.

Daily average trade prices are as follows:

Average daily trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

And zoomed in on the last nine months, starting just before Shearer resigned as leader:

Average daily trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

Daily average trade price, 2014 election winner stocks on iPredict for National (blue) and Labour (red).

After topping out at $0.78 on 28 March prices for NATIONAL have stabalised in the low 70% range.

Things have not really gotten better for Labour, with the split now fairly stable at 70/30 odds over the last month.  The book is still a little asymmetrical, stronger on the bid side than the ask side, although there is a bit more room for the price to move around than there was previously.

I still think National’s chances to win are priced a little high, but at 70% it’s close enough that I’m not going to bother throwing money at it to try and fix it.

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iPredict is running a contract on National winning the 2014 election.  It was originally launched on 26 October 2011, a month before the 2011 General Election, and has been floating around between $0.40 and $0.60 since then.  It’s only in the last month that the stock has moved significantly beyond $0.60, so it’s worth taking a quick look.  Full trade history is taken from Luke Howison’s excellent API interface for iPredict, and then tweaked with a bit of Excel.

As shown in the graph below, the increase in price since has been pretty constant since it was trading at about $0.45 in October 2013, about a month or so after David Cunliffe was elected leader of the Labour Party.  The average daily price hasn’t dropped below $0.60 since 8 February 2014.

Average daily trade price, 2014 National election victory stock on iPredict.

Average daily trade price, 2014 National election victory stock on iPredict.

In  case you are wondering if this is just a short term fluctuation the answer is probably not.  Daily volumes are shown below.

Daily volume, 2014 National election victory stock on iPredict.

Daily volume, 2014 National election victory stock on iPredict.

Even disregarding the spikes you can still see that trading has increased quite a bit since, again, about mid-October.  In that four month period a total of $19200 changed hands, or about 42% of the $46100 total that has been traded since 2011.  The stock is not just bouncing around on weak liquidity.

It should also be mentioned that bid order book is quite solid: if you wanted to force the evaluation of National’s chances of winning the election back to an even 50/50 then you would need to drop a total of $1420 on 2500 contracts at an average price of $0.57.  Then you’d have to keep it there.  It’s doable, but I don’t fancy your chances.

Intra-day volatility is shown below:

Intra-day volatility, 2014 National election victory stock on iPredict.

Intra-day volatility, 2014 National election victory stock on iPredict.

The most volatile days were 28 January 2014 (David Cunliffe’s State of the Nation speech and “baby bonus”, the new flag debate), 26 October 2011 (contract launch, so meta), 28 November 2011 (first weekday after 2011 General Election), 28 October 2011, and 11 October 2012 (opposition parties’ discussion on “manufacturing jobs crisis” and Labour allegations a video exists of John Key talking to GCSB staff in February about their involvement in the Kim Dotcom case), although most on small volumes.

Daily changes are as follows:

Daily price change, 2014 National election victory stock on iPredict.

Daily price change, 2014 National election victory stock on iPredict.

The biggest absolute daily changes (other than those mentioned above) were 29 April 2012 (general debate over whether David Shearer was the correct choice for Labour Leader (see Dim-Post) and the Banks/Dotcom scandal), 22 April 2012 (a series of bad headlines for National, none of which seemed to have any affect on the polls), 13 October 2012 (“manufacturing jobs crisis”, although interestingly also the day before the MSD/WINZ security leaks exposed by Keith Ng hit the headlines?).

The 28 January 2014 in particular was an interesting day: on the day David Cunliffe was giving his State of the Nation/Baby Bonus speech stocks surged 6.6c from 59.8c to 66.4c on near-record volumes as over $1300 changed hands.  Was this the beginning of the end for Labour’s 2014 election chances?

Finally, this is the point where I’m obliged to point out that if you really think that iPredict has a pro-National bias, and that National actually have a less than a 65% chance of winning the election then you should put your money where your mouth is and go and short some stock.  There is plenty of liquidity there for you to bail out should your views change so you won’t be locked into your position long-term; you can’t use that as an excuse either.

For what it’s worth, I personally I think that barring 4-5 good poll results for Labour the stocks are going to settle at around 65c for the next few months.  I don’t see how they can realistically go higher than 70c prior to the pre-election leaders’ debates.  Having said that, I don’t think one or two good poll results for Labour are going to be enough to move them in the opposite direction either.  Labour’s prospects are looking genuinely shabby compared to four months ago (post Cunliffe election), or even 12 months ago when Shearer was still leader.

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Update 20:45

Still too early to make comments on the electorate results, or results at the candidate level, but things are now stable enough to make national-level predictions.

Histogram showing the total number of seats National are expected to win in parliament.

Histogram showing the total number of seats National are expected to win in parliament.

Simulated distribution of seats for National now showing double peak. National a lot better off if NZF don’t make 5% than they are if they do.

Scenario analysis.

Scenario analysis.

National still predicted to lead government, but probability of majority rapidly falling. There is now a reasonable probability that the Maori party will hold balance of power.

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I’ve spent a few weekends over the last month or so driving around the southern North Island, taking in both Kapiti and Wairarapa sides of the Tararua ranges, and have been doing a bit of a billboard count as I went.  Should point out that the following takes in major and minor state highways and some properly rural stuff, in addition to the greater Wellington region:

  • National: 29 (54% +/- 7%)
  • Labour: 12 (22% +/- 6%)
  • Green: 5
  • ACT: 0
  • Maori: 4
  • NZF: 4

Okay, so it’s not exactly a scientific survey, but the thing that struck me was that the proportion of National and Labour billboards was within the margin of error of their recent polling.  This was true over pretty much any 50km stretch and didn’t seem to depend on electorate, and I started wondering about cause and effect.  Are National doing well in the polls because of all their billboards?  Or are the number of billboards are reflection of their funding and volunteer numbers?  I suspect it could be a bit of both.  (I should also note that this is just the number I saw from the driver’s seat.  I hear there are a few Labour billboards sitting down side streets, or facing perpendicular to the road, which I probably missed.)

The other thing that stood out was the difference in content:

  • The National party was running a variety of billboards, and they would change from week to week.  Candidate billboards, billboards with PM and National party leader John Key, as well as stuff trying to introduce policy (“Building better roads and …”) and general, ambiguous “For a Brighter Future” stuff.
  • The Labour party billboards were singularly introducing electorate candidates.  Nothing else.  I saw a large black sign that said “STOP ASSET SALES” which may have been Labour, but it wasn’t 100% obvious.
  • The Green party billboards were of the appeal-to-emotion type: pictures of happy people with the phrase “For a Richer NZ”.  No policy, no candidates, no party-leaders.

I just thought the differences were interesting, and the overall impression was that the National campaign is much more determined and better executed.

For a different conclusion, please see Kiwi Politico.

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